Take these as example questions to start you off but you don't necessarily have to answer these specific ones (your overall opinion will be fine):
Is it bad for the anime industry to go down this route pandering to certain tastes like say sacrificing plot or characters or whatever just so that they can get that cute factor? Is moe really that bad or are people just exaggerating it just because of their own dislike of it? What about Moeblob shows with no actual story line and just cute girls doing cute things? etc

As I mentioned in the Sasami thread, I don't mind being lost as far as the plot is concerned. The scenery just has to be nice and enjoyable along the way. As far as "cute girls doing cute things' shows are concerned, I like them as long as there's a story in there somewhere (like Tamayura Hitotose).

Tossing in a moe character just for the sake of pandering to lolicons or whatever I'm not a fan of... it demeans what might otherwise be a good show. For instance, tossing in a character thats obviously underage in a romance series, and then explaining it away that shes actually just a midget (Honey and Clover). I dislike that... though if the show is good enough, I will watch it and just try to ignore the pandering.

And whats up with that girls face?! She looks like a downs syndrome kid...

As I mentioned in the Sasami thread, I don't mind being lost as far as the plot is concerned. The scenery just has to be nice and enjoyable along the way. As far as "cute girls doing cute things' shows are concerned, I like them as long as there's a story in there somewhere (like Tamayura Hitotose).

Tossing in a moe character just for the sake of pandering to lolicons or whatever I'm not a fan of... it demeans what might otherwise be a good show. For instance, tossing in a character thats obviously underage in a romance series, and then explaining it away that shes actually just a midget (Honey and Clover). I dislike that... though if the show is good enough, I will watch it and just try to ignore the pandering.

And whats up with that girls face?! She looks like a downs syndrome kid...

In my honest opinion. I don't really consider it a problem as most moe is pretty much lost on me. It only matters if the show entertains me- in these types of shows cases that would more than likely be making me laugh.

Some moe I love, but some moe I hate. It might be a double standard I have. On one hand I love moe shows, K-ON! and Lucky Star being the best examples. Cute girls doing cute things brings happiness to all as far as I'm concerned. And moe as a general art style I don't have a problem with. But:

kitsuneshoujowrote:
Tossing in a moe character just for the sake of pandering to lolicons or whatever I'm not a fan of... it demeans what might otherwise be a good show.

This completely, Sorata's little sister in The Pet Girl of Sakurasou is the perfect example of this.

On another note, some people (like Hayao Miyazaki) think moe is sexist. Like it's indicative of men's unrealistic expectations of females to be cute, girly and innocent (or even submissive [maids]). I suppose that is true to an extent. Rarely ever do you find an innocent, moe girl in real life.

Is it bad for the anime industry to go down this route pandering to certain tastes like say sacrificing plot or characters or whatever just so that they can get that cute factor? Is moe really that bad or are people just exaggerating it just because of their own dislike of it? What about Moeblob shows with no actual story line and just cute girls doing cute things? etc

I love my moe. Honestly, seeing these girls being all cute just gives me the squeals and lifts my spirits up. That being said, having anime dedicated to MOE won't destroy other genres of anime.

I don't mind moe! I mean it's nice when you have cute girls doing cute things in a show that has a plot But I like to escape to moeblob shows after I watch a hard-core or super deep show, just to give my brain a break.

Is it bad for the anime industry to go down this route pandering to certain tastes like say sacrificing plot or characters or whatever...

You should rephrase to: IT IS bad when the anime industry panders to certain tastes while sacrificing plot or characters or whatever... blah fucking blah. Whatever is filled in for ''blah'' will not justify debasing plot/characters of anime. It's BLASPHEMY!